Adequate Procedures, Bribery Act & Proceeds of Crime, Director - Written by on Wednesday, February 29, 2012 15:29 - 0 Comments

SFO identifies questions it will ask to establish if there is tone at the top

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The second of the six principles of putting in place Adequate Procedures to prevent bribery is ‘Top Level Commitment’.

The MOJ guidance states:

“The top-level management of a commercial organisation (be it a board of directors, the owners or any other equivalent body or person) are committed to preventing bribery by persons associated with it. They foster a culture within the organisation in which bribery is never acceptable.”

The guidance goes on to say that “whatever the size, structure or market of a commercial organisation, top- level management commitment to bribery prevention is likely to include (1) communication of the organisation’s anti-bribery stance, and (2) an appropriate degree of involvement in developing bribery prevention procedures.”

The remainder of the guidance devoted to this topic goes on to set out some examples of what top level commitment or tone from the top is likely to equate to.  It is only less than a couple of pages of the guidance (pages 23 and 24).

If you are a senior manager in a company and you have not read it yet then we strongly encourage you to do so.  There is a link to it here.

It is also worth keeping in mind that if there is a problem and a manager is being interviewed by the SFO or the police they are likely to be asked about tone from the top.

Speaking recently the Director of the SFO emphasised the importance the SFO places on tone at the top (a lot) and laid out what the SFO expects to see. Here are some extracts of what the Director said:

“We tell Senior Executives that we expect them to set a real lead from the top on anti-corruption issues so that members of the corporation, its shareholders, its employees and the public, all see that the board is committed to a true anti-corruption culture within the corporation. We say that this requires their personal lead and commitment and that they must show this in practice.

We ask them about the key cultural values of the organisation and how this is demonstrated. We ask them how anti-corruption fits into this and what evidence there is that the executives are seeking to bring this about…

…we expect senior managers to ensure that this commitment is carried out throughout the organisation. We tell them that it is not enough simply to establish rules and procedures and to assume that everything is going to be carried out properly. We say that they need to carry out checks from time to time to make sure that their commitment is carried out and that there are no unpleasant surprises waiting for senior management.

What this means in practice is that formal documents setting out the rules and processes are important but are not the whole story. We expect management to talk us through how they know whether or not the rules are being carried out properly and how they identify potential risks.

We also talk to senior management about their risk assessment. How do they know where the risks are in their worldwide business? And we ask them as well how they keep that risk assessment fresh so that they are dealing with current and foreseeable risks.”

The SFO interview

Managers being interviewed by the SFO in a business which has suffered an ethical failure can expect to be asked some basic questions. These are likely to include:

“What do you do to demonstrate tone from the top?”

“Do you know what checks the business does to make sure that the anti bribery commitment is carried out?”

“Tell us how you know whether or not the rules are being carried out properly and how you identify potential risks.”

“Tell us about the risk assessment the business undertook in preparation for the Bribery Act and tell us how the business keeps that risk assessment fresh”.

A failure to be able to answer these questions satisfactorily may mean that a business does not have Adequate Procedures in place meaning that, in the case of a bribe having been made, it is guilty of an offence. That is bad news for the company.

If managers are unable to answer these basic questions then the SFO may try to argue that they have been wilfully blind to risks that they are running. This would be equally bad news for them. They would then potentially need to consider carefully their personal position in light of their personal criminal liability for consenting or conniving (turning a blind eye) in bribery under Section 14 of the Bribery Act.  Of course this will all be heavily fact dependant and there may be a good reason why a manager is unable to answer some or all of these questions.

If you are a manager of a business: Can you answer these questions today?  If you cannot can you think of a good reason why you don’t know the answer?

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